A new poll has revealed that many Britons feel individuals who deal with their debts by declaring bankruptcy should face a tougher regime than they do…
A new poll has revealed that many Britons feel individuals who deal with their debts by declaring bankruptcy should face a tougher regime than they do.
Conducted by insolvency professionals body R3, the survey found 82 per cent believe some people use the system to write off money they owe as a result of years of reckless spending.
The current system means bankruptcy status last just a year and 64 per cent believe those previous whose spending behaviour has been rash should be treated differently to those who have simply been unfortunate.
A similar number (65 per cent) believe most irresponsible spenders could avoid bankruptcy by cutting back on their spending and adopting a more sustainable financial lifestyle.
President of R3 Lee Manning remarked that the bankruptcy laws in the UK are "quite lenient" compared with other countries.
He added: "While no-one is advocating a return to the 'debtor's prison', there is a strong feeling that a debtor's spending behaviour should be factored into the length of the term of bankruptcy. Perhaps fuelled by stories of celebrity debtors, there is support for a move to distinguish the genuine hardship case from the reckless spender. "
Those who are struggling to meet their debt repayments – whether due to past overindulgence or misfortune such as redundancy – may wish to consider an individual voluntary arrangement (IVA) as an alternative to bankruptcy.
One advantage of an IVA is that, unlike its alternative, such an arrangement is confidential and therefore will not be publicised in the local press.
It also enables the person in debt to feel they are taking some responsibility, as they follow a regime of paying an agreed lower proportion of their debts in regular monthly payments for a period of up to five years.
Those thinking of taking out an IVA may wish to find out the details of what is involved first.
Insolvency Service figures have indicated individuals are increasingly opting for IVAs.
The latest data for England and Wales showed that the first three months of 2012 represented the fourth successive quarter in which IVAs exceeded individual bankruptcies.
By Joe White